March 16, 2017 is an important date for U.S. federal government because it can no longer borrow from the public as it has been in the past to fund its operations.

The American national debt will be frozen at its current level: about $20.1 trillion because the mandatory debt level has been reached.

But, that doesn’t mean America is out of cash to pay its bills: principal and interest on the debt, social security benefits, Medicare and Medicaid payments, salary to government workers and soldiers and payments to government contractors for F-35 stealth fighter jets, new Ford class aircraft carrier, M-4 assault rifles and M1 A3 Abrams tanks.

However, there will be no infrastructure projects. No Trump border wall. no tax cuts for American citizens and no tax relief for American corporates until the debt limit is raised by the Congress.

As of now, the Treasury Dept has to use extraordinary measures to keep the federal government from shutting down until about October or November 2017. By then, Congress has to raise the debt limit or the U.S. government will be in bankruptcy.

Assuming the debt limit is lifted in time, when will this borrowing end?

Maybe America can use the threat of bankruptcy to re-negotiate with its creditors. Several optionsare available such as forcing creditors to take 60% haircut on all outstanding loans, change the term of existing loans to 100 years and modify interest rates on all loans to negative.

Alternatively, American federal government, maybe all Americans should consider this option too, should cut up every credit card it uses and start living within its means.

Is this likely in the next two decades? Not a chance unless pink pig flies.

Prime rate will be higher, mortgage interest rate will rise, U.S. dollar will strengthen and interest payment on national debt will gradually take up more of federal government’s tax revenue after FOMC’s highly anticipated move next week.

If the U.S. economy continue to pick up strength and labor force begin to tighten in the coming months, pretty soon we will see 4% handle on the long bonds. But the biggest deal will happen when the Fed begins to shrink its huge fixed income assets on its balance sheet, currently at $4,458,018 million as of March 1, 2017.

You want to buy or sell your houses before it hits the market. Otherwise, you will see a bear market on housing for as long as eye can see into the future.

Believe me, that will be no fun at all if you are facing a market with 6% to 7% mortgage interest rate.

Politicians always blame others first for their own mistakes which was what Trump did in this case. The way it goes around Trump these days, more leaks will definitely come out of Trump’s White House whether Trump likes them or not.

Every reporter in Washington DC dreams of getting a “Watergate” moment in his or her reporting life. They are waiting. They have time. And they have patience.

The target of this strategic re-balance from Europe and Middle East to Pacific Rim is China.

The objective is to maintain (or protect) the world order America built over the past 70 years and the hegemony America enjoyed since the end of WWII.

The by product of this foreign policy initiative is a weakened China and a damaged Chinese economy.

The hidden agenda is to divert the world attentions from the total failure of America’s democratization effort in the Middle East. However, the U.S. achieved its intention to dominate the world vis a vis a retracted Middle East, a wounded Europe and a crushed Euro.

The beneficiaries are American weapon makers which have a brand new market to sell their military hardware to. They have already made a killing from many countries in the Middle East.

The U.S. will likely use several tactics to weaken China’seconomy: sanctions, tariff, 35% tax on all imports from China, freeze of Chinese bank assets in the U.S., etc. On the political front, abandoning “one China” policy, recognizing Taiwan as a separate country, establishing formal ties with Taiwan and conducting military exercise with Taiwanese arm forces are merely first steps.

What Beijing plans to do isn’t very clear right now but China will not give in easily to words from people in Trump’s administration.

What can ordinary Chinese people do? How about stop buying everything American: from McDonald’s to Starbucks to Boeing?

Dangerous conflicts are inevitable but direct military conflict is probably not likely for now. The Cold War against China started by Obama will be carried out by Trump and American presidents after him. In the end, the game will play out in the economic front instead of fighting it over with boots on the ground.

China has $3 trillion in foreign currency reserves. America has $20 trillion national debts and borrows $500 billion a year just to get by.

As if the U.S. isn’t spending enough on defense, Navy wants to build 355 more ships in the next 30 years. The initiative is the result of Trump’s denand to re-build American’s arm forces to counter the threats from China and Russia.

Since Navy revealed its wish list, Army, Air Force and Marines will send in their’s too. Then there is Coast Guard and Special Ops. Every department wants a piece of the big pie.

America defense spending already accounts for ~45% of the total defense spending by every nation in the world.

But, where will the money come from; Medicare, Medicaid, ObamaCare, education or food stamps? Will the Freedom Caucus go along with this kind of reckless spending? Will Democrats play dead and let Trump have his way? No way.

U.S.national debt is already a whopping $20 trillion right before Obama’s moving vans clear 了the White House gate. With Trump in the WH, it is likely that U.S. annual deficit will explode to the upside and forcing America borrowing 0even more from its foreign credictors. But, will they? If they reduce their purchases, market interest rate of the weekly Treasury auctions will rise.

With the U.S. economy and labor market reportly poised to improve after spending the past 8 years in the out house, the Fed will be forced to raise the overnight lending rates. It will push all lending rates higher which will increase the interest payment on American’s national debt.

In a rising rate environment, what the Fed should have done is to sell the short term Treasury notes and replace them with long term Bonds to lock in low rates before they go up. But, that’s not what the Fed is doing. As a result, interest payment on U.S. national debt will be out of control in a few years.

Empire comes and empire goes. The first sign of trouble usually shows up in too much debt. The empire of America is still sailing at pretty high speed but the load it carries gets heavier and heavier and the hole under the boat gets bigger and bigger.